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3 ways a home equity loan could improve your life

By Jackie Lam

Reviewed by Kimberly Rotter

Apr 10, 2023

Read time: 2 min

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After my friend bought a house in LA, she took out a home equity loan. What did she use the stash of cash for? To pay off her credit cards. 

With a home equity loan, you can borrow against the equity you have in your property. Equity is your home’s value minus the amount you still owe on your mortgage. You can use a home equity loan just about any way you want to.

Here are some ways a home equity loan can improve your life.

#1: Use it to pay off your credit cards

Carrying large balances on one or more credit cards? You could consolidate them with a home equity loan. Home equity loans typically have much lower interest rates than credit cards, so you could save on interest charges.  

Besides the big advantage of saving you money, rolling your debts into a new, single loan could also simplify your finances. Multiple payments become one. And the monthly payment on a home equity loan could be lower than the total that you were paying on all your smaller debts, releasing the pressure valve on your budget and leaving you with more cash in your pocket each month.

#2: Make some home repairs 

Don't put it off any longer. Boost your home's value and make it a more pleasant place to live by giving it the upgrade it so deserves. Here are some other ways home improvements can enhance your life: 

#3: Buy now, pay later 

Get the things you need now, with time to pay them off later. Home equity loans have a longer repayment period compared to personal loans, and that could help you get a lower payment that’s friendly on your budget. 

A home equity loan gives you a lump sum of money, and a home equity line of credit lets you borrow as needed up to your credit limit. Either way, you can get the amount you need now, with a manageable monthly installment to pay it back.

That means you can plan out your payments—and your financial life at large. 

Bonus #4: [Fill in the blank]

A home equity loan could boost your life happiness quotient in many ways, and happiness doesn’t always look the same. Maybe what would improve your life right now is to pay off medical bills, or cover an unexpected financial emergency. Maybe you’d like to pay for your child’s wedding. The best way to use a home equity loan is the way that helps you the most. 

What’s your financial goal?

Jackie Lam - Author

Written by Jackie Lam

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

kim rotter 2022 2

Reviewed by Kimberly Rotter

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Article Topics
Money Know-How
WTFinance

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